The General Basis of Arbitrator Behavior: An Empirical Analysis of Conventional and Final-Offer Arbitration

A general model of arbitrator behavior in conventional and final-offer arbitration is developed that is based on an underlying notion of an appropriate award in a particular case. This appropriate award is defined as a function of the facts of the case independently of the offers of the parties. In conventional arbitration the arbitration award is argued to be a function of both the offers of the parties and the appropriate award. The weight that the arbitrator puts on the appropriate award relative to the offers is hypothesized to be a function of the quality of the offers as measured by the difference between the offers. In final-offer arbitration itis argued that the arbitrator chooses the offer that is closest to the appropriate award.The model is implemented empirically using data gathered from practicing arbitrators regarding their decisions in twenty-five hypothetical cases. The estimates of the general model strongly support the characterizations of arbitrator behavior in the two schemes. No substantial differences were found in the determination of the appropriate award implicit in the conventional arbitration decisions and the determination of the appropriate award implicitin the final-offer decisions.

Predicting Outcomes in Investment Treaty Arbitration

Crafting appropriate dispute settlement processes is challenging for any conflict-management system, particularly for politically sensitive international economic law disputes. As the United States negotiates investment treaties with Asian and European countries, the terms of dispute settlement have become contentious. There is a vigorous debate about whether investment treaty arbitration (ITA) is an appropriate dispute settlement mechanism. While some sing the praises of ITA, others offer a spirited critique. Some critics claim that ITA is biased against states, while others suggest ITA is predictable but unfair due to factors like arbitrator identity or venue. Using data from 159 final cases derived from 272 publicly available ITA awards, this Article examines outcomes of ITA cases to explore those concerns. Key descriptive findings demonstrate that states reliably won a greater proportion of cases than investors; and for the subset of cases investors won, the mean award was US$45.6 million with mean investor success rate of 35%. State success rates were roughly similar to respondent-favorable or state-favorable results in whistleblowing, qui tam, and medical-malpractice litigation in U.S. courts. The Article then explores whether ITA outcomes varied depending upon investor identity, state identity, the presence of repeat-player counsel, arbitrator-related, or venue variables. Models using case-based variables always predicted outcomes whereas arbitrator-venue models did not. The results provide initial evidence that the most critical variables for predicting outcomes involved some form of investor identity and the experience of parties’ lawyers. For investor identity, the most robust predictor was whether investors were human beings, with cases brought by people exhibiting greater success than corporations; and when at least one named investor or corporate parent was ranked in the Financial Times 500, investors sometimes secured more favorable outcomes. Following Marc Galanter’s scholarship demonstrating that repeat-player lawyers are critical to litigation outcomes, attorney experience also affected ITA outcomes. Investors with experienced counsel were more likely to obtain a damage award against a state, whereas states retaining experienced counsel were only reliably associated with decreased levels of relative investor success. Although there was variation in outcomes, ultimately, the data did not support a conclusion that ITA was completely unpredictable; rather, the results called into question some critiques of ITA and did not prove that ITA is a wholly unacceptable form of dispute settlement. Instead, the results suggest the vital debate about ITA’s future would be well served by focusing on evidence-based insights and reliance on data rather than nonreplicable intuition

The Impact of Compulsory Arbitration on Bargaining Behavior: An Experimental Study

A series of experiments compares bargaining behavior under three different settings: no arbitration, conventional and final offer arbitration. Under no arbitration disputes with zero payoffs were around 10%, while the pie was equally split in less than half of the cases. Under conventional arbitration - where the arbitrator is free in choosing his award - every third negotiation ended in dispute giving evidence for a modified chilling effect. Under final offer arbitration – where the arbitrator has to award to the bargainers either one of their final offers - there was only a small increase of disputes while equal splits have doubled to 80%. The experiment shows final offer arbitration, though having lower dispute rates, to interfer more with bargaining behavior than conventional arbitration where the bargaining behavior was similar to the no-arbitration treatment. Under final offer arbitration, negotiators adjust their bargaining strategy to the arbitrator´s expected award. --Bargaining,Arbitration,Experiments,Fair Awards

Taking the Mass out of Mass Torts: Reflections of a Dalkon Shield Arbitrator on Alternative Dispute Resolution, Judging, Neutrality, Gender, and Process

Life in the modem and post-modem world has changed our understanding of many traditional legal matters. Although many died from plagues, wars, and some shipping and agricultural accidents in the years which preceded the Industrial Revolution and modem breakthroughs in medicine, the twentieth century has given rise to group injury and death -it unprecedented levels, all as we march toward growth, progress, and greater goods for greater numbers. Mass progress has resulted in mass injury, which in turn has transformed individualized justice into mass justice. Whether structured as large class actions or as thousands of individual cases dealing with the same accident, product, or chemical, lawsuits claiming compensation for the harms caused by the fruits of production of a mass industrialized society proliferate in our legal system and challenge many of the basic tenets of American, adversarial, common law adjudication

Fifty-Sixth Annual Report of the Federal Mediation and Conciliation Service, Fiscal Year 2003

Federal Mediation and Conciliation ServiceFMCSFY2003_Annual_Report.pdf: 385 downloads, before Oct. 1, 2020

How Binding Are WTO Rules? A Transatlantic Analysis of International Law

Presented at the University of Tuebingen, 14-16 October 2004 Conference on Changing Patterns of Authority in the Global Political Econom

Science in the Court: Is There a Role for Alternative Dispute Resolution

It is suggested that alternative dispute resolution procedures might remedy perceived problems in court procedures for dealing with scientific questions in medical malpractice, product liability and toxic tort litigation

Team Versus Player? A Study of Baseball Salary Arbitration and the Arbitrator Exchangeability Hypothesis

I assess the decisions of arbitrators in Major League Baseball (MLB) salary arbitration hearings under the arbitrator exchangeability hypothesis. Salary arbitration occurs when a player, typically one with more than three, but fewer than six, years of major league service, cannot reach an agreement with his team on a contract for a given year. When this happens, the player and team go to an arbitration hearing. In a hearing, each side presents oral arguments in front of a panel of three independent arbitrators, proclaiming why the arbitrators should rule in their favor. The arbitrators then either decide to award the player his request or the team’s offer as his salary for the upcoming season. Arbitrators are not permitted to issue compromises. Historically, teams have won roughly 60 percent of hearings, suggesting that arbitrators might have a pro-team bias. However, my research demonstrates that teams should have won approximately 70 percent of hearings, indicating that arbitrators might actually favor the players. Because there is a statistically-significant difference between the 60 percent observed team win rate and the 70 percent expected team win rate, my results suggest the baseball arbitrators behave in a manner that is inconsistent with the arbitrator exchangeability hypothesis, with a resulting pro-player skew

Nonbinding Suggestions: The Relative Effects of Focal Points versus Uncertainty Reduction on Bargaining Outcomes

This paper focuses on the effects of nonbinding recommendations on bargaining outcomes. Recommendations are theorized to have two effects: they can create a focal point for final bargaining positions, and they can decrease outcome uncertainty should dispute persist. While the focal point effect may help lower dispute rates, the uncertainty reduction effect is predicted to do the opposite for risk-averse bargainers. Which of these effects dominates is of critical importance in the optimal design of alternative dispute resolution (ADR) procedures, which are becoming increasingly utilized to help resolve disputes in a variety of settings. We theoretically examine the effects of recommendations on the bargaining contract zone. Our theoretical framework, which allows bargainers’ final positions to influence a binding outcome should negotiations fail, provides for a more stringent test of focal points than previously considered. We also present data from controlled laboratory bargaining experiments that are consistent with our model of recommendation effects. Recommendations are empirically shown to influence final bargaining positions and negotiated settlement values. Furthermore, dispute rates are significantly lower when one includes recommendations, even where the recommendation is completely ignored in final-stage arbitration. This highlights a potentially significant role for the use of nonbinding procedures, such as mediation, as a preliminary stage in developing more efficient ADR procedures.

Designing Integrated Conflict Management Systems: Guidelines for Practitioners and Decision Makers in Organizations

A committee of the ADR (alternative dispute resolution) in the Workplace Initiative of the Society of Professionals in Dispute Resolution (SPIDR) prepared this document for employers, managers, labor representatives, employees, civil and human rights organizations, and others who interact with organizations. In this document we explain why organizations should consider developing integrated conflict management systems to prevent and resolve conflict, and we provide practical guidelines for designing and implementing such systems. The principles identified in this document can also be used to manage external conflict with customers, clients, and the public. Indeed, we recommend that organizations focus simultaneously on preventing and managing both internal and external conflict. SPIDR recognizes that an integrated conflict management system will work only if designed with input from users and decision makers at all levels of the organization. Each system must be tailored to fit the organization\u27s needs, circumstances, and culture. In developing these systems, experimentation is both necessary and healthy. We hope that this document will provide guidance, encourage experimentation, and contribute to the evolving understanding of how best to design and implement these systems